Mayors divided on regional fuel tax

Dave Cull, Dunedin mayor and also president of Local Government New Zealand, has suggested that a regional fuel tax ”might” be something that could be used outside Auckland, both other Otago mayors have different ideas on raising more money.

Dunedin Mayor Dave Cull says a fuel tax such as that proposed for Auckland may be something that could raise money for infrastructure in Dunedin, but mayors in the rest of the region have not supported the idea.

Mr Cull pointed to the Port Chalmers cycle/walkway as one project a regional fuel tax could help pay for.

He said such a tax was appropriate for funding transportation infrastructure, but other mechanisms would be more appropriate for other needs.

”Across the country there are instances where there are transportation infrastructure needs, and there’s even money within the NZ Transport Agency available, but there’s not sufficient resource in the local body to match the funding, so nothing happens.”

The cycle/walkway to Port Chalmers was an example where a lack of resources was the problem.

”That would be a candidate for that sort of funding.”

”It’s about all road users contributing to make the whole system safer and more efficient.”

It seems to be more about trying to find ways of funding projects without having to keep raising rates so much.

The amount of money spent on cycleways and the disruption to traffic is already a contentious issue in Dunedin. Hundreds of car parks in or near the CBD have been removed or are planned to be removed to make way for cycle lanes on streets, including on both main streets running right through the city.

There is low usage of the cycle lanes. I was talking to someone yesterday who was parked for half an hour on state highway one during the busiest traffic time of day, and they saw three cyclists. I daily drive on streets where all car parks have been converted to cycle lanes that are only occasionally used by cyclists, most days I see none.

I think that fuel is already quite a bit more expensive down here. Slapping a tax on it to fund pet council projects would likely be very unpopular.

Other mayors in the area want more money other than from rate hikes but not from a fuel tax.

Queenstown Lakes Mayor Jim Boult…

…said the fuel tax might work for Auckland but not for Queenstown, which had 5million visitor nights and just 16,000 ratepayers.

”Large numbers of people fly in here on aeroplanes, arriving on tour coaches, so their ability to contribute to our economy is limited through a petrol tax.”

Instead, he wanted a visitor levy, something he had said before ”constantly”.

Central Otago Mayor Tim Cadogan…

…said the area’s fuel was already more expensive than Auckland’s, so he did not support a fuel tax.

Paying for expensive infrastructure was a problem.

The planned Cromwell wastewater treatment plant had a budget of $10 million and the Lake Dunstan water supply project would cost up to $17 million.

”We’ve got 20,000 people living here; that’s pretty tough.”

Using a fuel tax to pay fore waste water treatment and water supply would be ridiculous. Cromwell is increasingly popular for tourists, and also operates as a satellite town for Queenstown and Wanaka. It is also the centre of a thriving wine region.

Clutha Mayor Bryan Cadogan…

…said local government ”needs something”, but he did not support a fuel tax.

The issue Clutha had was paying for infrastructure related to its tourism industry, which was ”not as advanced as most”.

The area had a declining and ageing population and the council could not keep going back to them for more money.

”It just seems so simple to put a tax on for tourists when they come in. We need it, and we need it now.”

Clutha District includes the Catlins area that is increasingly popular for tourists (for good reason, it’s a great area to visit).

However all these areas have different situations and needs.

Fuel is already taxed heavily in New Zealand:

59.524 cents – National Land Transport Fund

6 cents – ACC Motor Vehicle Account

0.66 cents – Local Authorities Fuel Tax

0.3 cents – Petroleum or Engine Fuels Monitoring Levy

9.9726 cents GST on the above taxes

We pay a total of 26 cents GST on $2 of petrol (diesel is taxed differently).

It is now government policy for all of the petrol excise tax motorists pay to be directed to the National Land Transport Fund for investment back into New Zealand’s road and transport system. The AA lobbied hard on behalf of motorists for many years to have all the taxes devoted to road building and maintenance, road safety education and enforcement, and subsidies for public transport.

Previously, about 19 cents per litre of the tax motorists paid on petrol was diverted by the government to non-road and transport related projects.

For far too long there has been significant under-investment in the nation’s road and transport network, and tax diversion has been unfair and at the expense of motorists.

Motorists must not be selectively taxed or treated as an easy source of tax revenue to pay for projects that would be more fairly funded by other sources such as rates or general taxation.

We don’t support regional petrol levies that unfairly target motorists to subsidise the transport decisions of others. The future funding of public transport must not be another tax on motorists added to current taxes and charges, but has to be independently justified in terms of defined benefits to motorists.

Back to Cull:

On the Government’s commitment to reviewing local government costs and revenue, Mr Cull said LGNZ had been saying the revenue stream from rating property was not sustainable.

Perhaps it is extravagant spending wishes of councils that is unsustainable.

One could cynically suggest that mayors and councillors want to divert attention from them raising rates far more than inflation.

Our fuel is already taxed heavily. Perhaps mayors need to look more at user pays – but that’s never likely to happen for cyclists.

There’s a good case for some cycleways. A recently partly built harbour side cycleway here in Dunedin is popular and well used – mostly recreationally. One problem is the escalating cost of extending this all the way to Port Chalmers – estimates have over doubled.

Were initial estimates hopeless, or do rules and regulations and ideal requirements blow out the costs? There are suggestions that cycleway construction is lucrative because councils pay whatever it takes. The Dunedin Council wasted half a million dollars on a poorly designed cycleway that had to be redesigned and is still hardly used.

Getting sensible mayors, councillors and planners may be more important than finding ways to hide how much we are increasingly taxed and rated.

Talking of rates – they are about $2000 a year for an average house in Dunedin – how does that compare to elsewhere?

50 Comments

Gezza

Petrol tax
When you last bought petrol, 66.484 cents per litre was collected by the government as fuel excise (excluding GST). Motorists are charged GST on the petrol excise, which amounts to a tax on a tax. The AA has called for the GST to be removed – a move that would reduce prices by 10 cents per litre and help relieve the financial burden on New Zealanders.
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There are no taxes on diesel other than GST. Instead, diesel vehicles pay Road User Charges. All fuels also pay an Emissions Trading Scheme levy (approximately 2.5 cents per litre).

It is now government policy for all of the petrol excise tax motorists pay to be directed to the National Land Transport Fund for investment back into New Zealand’s road and transport system. The AA lobbied hard on behalf of motorists for many years to have all the taxes devoted to road building and maintenance, road safety education and enforcement, and subsidies for public transport.

Previously, about 19 cents per litre of the tax motorists paid on petrol was diverted by the government to non-road and transport related projects.

AA speaking up for motorists
The AA welcomed the decision to pledge all excise tax to the National Land Transport Programme from July 2008. For far too long there has been significant under-investment in the nation’s road and transport network, and tax diversion has been unfair and at the expense of motorists.

Motorists must not be selectively taxed or treated as an easy source of tax revenue to pay for projects that would be more fairly funded by other sources such as rates or general taxation.

Regional petrol levies (or “green taxes”)
We don’t support regional petrol levies that unfairly target motorists to subsidise the transport decisions of others. The future funding of public transport must not be another tax on motorists added to current taxes and charges, but has to be independently justified in terms of defined benefits to motorists.http://www.aa.co.nz/cars/maintenance/fuel-prices-and-types/petrol/

MaureenW

Alan Wilkinson

Local government amalgamation turned councils into unaccountable monopolies effectively run by self-serving staff with marginal oversight from ineffectual remote part-time would-be politicians. It was devised in order to let the Labour party take over big cities and seize the income from the wealthy areas that would not otherwise have voted for them. It has been completely successful in that goal.

Patzcuaro

Gezza

Yes. Me. In fact everybody living in Tawa, when it had its own Borough Council. It had the cheapest rates in the country, from memory – before we got force-fed into the [horribly rude word deleted by me to save PG the bother. Gez] WWC! It was a prudent council with a long-serving, well-respected Mayor (Merv Kemp) that consistently lived within its means.

And our energy supplier was the HVEP&GB. A fine, efficient, upstanding supplier of energy that returned us all a substantial dividend cheque when it got flogged off to private companies with rapacious ececutives & shareholders. Just saying.

Gezza

Alan Wilkinson

I agree with you, Sir Gerald, which was why we fought the forced amalgamations back in 1989 and following years. But idiot Banks took over and blocked us just as we were winning with the support of the previous Minister, Warren Cooper. Screw Bolger too for making that change. Incidentally the two areas most active in the resistance back then were Devonport where I lived and Bay of Islands where I live now. It’s cost the country billions.

Trevors_elbow

Ehen my council spends millions on cbd and council accommodation and goes well over budget… and then threatens library, pool closures when rates reset time comes i feel i have good cause to deem rates excessive and council extremely inefficient…

Conspiratoor

Cycling commuters are generally above average IQ, so will have worked out how to enjoy the ride without going to head to head with motorists on a main highway. Also varsity has wound down as students have their heads buried in books at this time of year

Conspiratoor

Gezza

I hear anecdotally that cyclists avoid using cycle lanes on the main highways through the city to avoid heavy traffic, especially trucks. So one could ask why that’s where they are putting the cycleways.

Conspiratoor

pg, I hear the DCC has become dysfunctional so what you say comes as no surprise. But seriously, each council should be acting in close consultation with a ginger group representing local cyclists. This leaves me wondering whether such consultation took place for if it were, the cyclists would have seen through the folly of this and walked the council back

Gerrit

One good thing about cycle lanes, in Auckland at least, is the number of motorcyclist using the designated lanes to be safer from us caged road users. How long before we will see dedicated policing to stop motorcyclists on bike lanes?

Conspiratoor, Auckland main artery into the CBD is Nelson Steet. Nice dual carriage cycle lane (up and down lanes) down the left hand side but still the cyclist will insist riding down Nelson Street (one way traffic down hill only) in the car lanes. IQ pretty close to zero for those guys. Some cyclist just don’t like getting stuck behind slower cyclists it would seem.

True-like the ones who were three abreast on the open road-a winding one with lots of bends to hide cyclists- and who narrowly missed being squashed by us. One in the lot behind looked back, glared at us-how dare we use the road?-and moved up to join his mates. Four abreast and we couldn’t safely pass them for ages. I have a dim memory of them being five abreast at one stage until sanity prevailed over arrogance.

PDB

Regional fuel taxes are a bad idea for the sheer fact that they open up further revenue avenues for Councils who instead should be cutting their over-bloated costs. The wastage within Auckland Council for instance is sickening & Goff has done nothing to address the problem.

Council debt & spending is out of control up and down the country and no doubt any money collected via a fuel tax will be similarly wasted.

Pickled Possum

@ morning PDB Well that’s Pretty Damn Bitchin!!
words like “Council debt & spending is out of control up and down the country and no doubt any money collected via a fuel tax will be similarly wasted” … making sense to me.

Gezza

PDB

Issues include voter disinterest, low quality councilors & incompetent council staff within key roles. Ratepayers can be treated like money taps & the lack of competition within Councils leads to low productivity, higher costs and more general wastage. Growth is a factor in cities such as Auckland & Hamilton but you’d think developers should be bearing the costs of any new infrastructure whilst Christchurch had the earthquakes to deal with.

I’ve seen first hand Council departments getting to April/May with too much money left-over and then blowing the lot on unessential stuff/fluff so that come the new financial year starting July 1st they don’t get their funding reduced.

In terms of Auckland Council, cost savings have been made by reducing funding used in the upkeep of key Council infrastructure and assets which is then wasted throughout the Council in administrative/ internal costs, over-funding of non-essential Council services & areas where Council shouldn’t even be involved. Debt per residential ratepayer in Auckland has ballooned by 34% in the last three years to $22,189.

Unless Councils get right back to basics in only funding essential services & concentrate on cutting costs rather than increasing revenue streams/debt levels then nothing will change.